Oil drillers hold a crucial piece of the net zero puzzle

From David Fickling / Bloomberg Opinion

Technology, as science fiction writers like to warn, has no sense of morality. Create life, and your monster could end up turning against you. Build an artificial intelligence system and you could provoke a robot apocalypse.

This rule applies to both good and bad. Microwave ovens are a by-product of World War II-era military radar technology. Epipen injectors were designed for soldiers to use against nerve agents.

Increasingly, we’re seeing similar technology spillovers in the energy transition, with the know-how gleaned from making bad old fossil fuels being used for clean renewable purposes.

The offshore wind industry has learned important lessons from decades of drilling for offshore oil and gas. In many parts of the world it has already taken the baton from petroleum as the largest contributor to offshore energy investments.

It’s similar with fracking. Lessons learned from forcing oil and gas from deep rock over the past few decades could provide a crucial piece of the puzzle for building zero-carbon grids by transforming geothermal energy from a niche industry into a power plant.

At present, geothermal electricity — the use of hot rock buried deep in the earth to force fluids to the surface and power turbines — is a relative rarity. Volcanic areas like Iceland, Kenya, New Zealand, the Philippines and the western US use it quite frequently thanks to the high temperatures near the surface that fuel mineral springs like those in Yellowstone National Park and Rotorua in New Zealand.

Elsewhere, the useful rocks are either too deep or too impervious to be of much use. While electricity generation from wind and solar energy increased by about 2,600 terawatt hours (TWh) between 2009 and 2021, geothermal energy added only 28 TWh. It’s in a slump similar to that of fracking 20 years ago, before the US boom took hold.

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The industries have a surprising amount in common. Both dig holes deep in the ground, hoping to extract energy by forcing fluids to the surface. Both emerged in the mid-20th century but remained small for decades as technology and economics prevented wider use. Both suffer from decline rates: oil becomes harder to produce as crude oil is pumped out and subsurface pressure decreases, while geothermal reservoirs gradually cool over time and lose their ability to force steam to the surface.

Some of the most important information needed to determine the ideal locations for geothermal reservoirs is locked away in the vast database of sedimentary rock basins that the petroleum industry has amassed over the past century.

There are already signs of spillovers happening. The US government has developed a fluid to fracture impermeable rock to open up more geothermal reservoirs, a process identical to that used by frackers in petroleum reservoirs.

Start-up Eavor Technologies Inc plans to use the horizontal wells being developed by the unconventional oil and gas industry to build radiator-like pipe networks in areas otherwise unsuitable for development.

Shell PLC established a geothermal division in 2018 to study the potential of the technology to heat buildings and industry in the Netherlands. Baker Hughes Co, the former oilfield services division of General Electric Co, has developed deep, high-temperature drilling technologies to explore reservoirs that can produce heat more efficiently than conventional ones.

There are even proposals to use the technologies to make other materials critical to the energy transition. Current geothermal wells operating near California’s Salton Sea may be able to extract enough lithium from underground brines to meet US needs 10 times over. One of the few operational green hydrogen plants in the world is powered by a geothermal facility outside Iceland’s capital, Reykjavik.

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The question is whether the innovations being developed by oil and gas producers will be enough to overcome geothermal’s high upfront costs, which don’t seem to be coming down like wind and solar projects.

Oil and mining companies typically enjoy periods of super profits to compensate for the haphazard nature of resource exploration, while utilities generate unspectacular but reliable margins year after year. Geothermal seems to get the worst of both worlds, its costs dependent on unpredictable geology while its revenues are dictated by stable, regulated power grids.

Reducing bureaucracy and local resistance to projects would be essential. It can be more difficult to get a permit for a geothermal well than for an oil well in the US. In Japan — on paper one of the countries with the greatest potential for the technology — owners of onsen hot-spring bathhouses often block development, fearing the industry could deplete the hot-rock reservoirs.

The hurdles are not pure NIMBYism either. Some of the problems that fracking can cause in terms of minor earthquakes and groundwater contamination are also risks that geothermal developers must contend with.

The potential remains significant. Geothermal energy doesn’t stop generating when the sun goes down or the wind stops blowing. This should allow it to benefit from higher peak prices as variable renewables take an increasing share of power grids.

If we are to make the clean energy transition in the coming decades, we will need every tool at our disposal. Geothermal energy should be part of that mix.

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David Fickling is a Bloomberg Opinion columnist covering energy and commodities. He previously worked for Bloomberg News, the Wall Street Journal and the Financial Times.

This column does not necessarily reflect the opinion of

the editors or Bloomberg LP and their owners

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